IPO ACTIVITY is set to surge by the middle of the year after a seasonally low March quarter, according to the Deloitte IPO Report — Quarterly Update.
Despite the seasonal lull, Sarah Dulhunty, head of equity capital markets at Blake Dawson Waldron says people in the industry have been hard at work.
“I think the general sense is it’s been frantic. We’ve certainly found it’s been very busy and I’ve got the impression that a lot of people have found it busy in preparation for things in the next couple of weeks or the next month or so,” she said.
With almost $3 billion in IPOs scheduled for early April, the second quarter is off to a good start. This week saw Boart Longyear, one of the world’s largest providers of drilling services, list with a capital raising in excess of $2.5 billion, along with the India Equities Fund with a capital raising of around $200 million. McArthurCook Asian Real Estate is scheduled to list on April 11 and expected to raise approximately $80 million.
This is up on the value of the 39 IPOs with a combined capital raising of approximately $256 million that listed in the March quarter.
According to Deloitte’s analysis, resources IPOs dominated the first quarter, accounting for the top 13 places by performance. The top five performing entrants, Yellow Rock Resources Ltd ($3.5 million), Wolf Minerals Ltd ($3 million), Prime Minerals Ltd ($2.2 million), Sovereign Metals Ltd ($5.9 million) and Bowen Energy Ltd ($5 million), collectively returned an average gain of almost 200 per cent, compared with a 40 per cent average return for IPOs across all sectors.
While IPOs from the resources sector were the best performers, buoyed by that industry’s boom, the size of resources floats was relatively small compared to the huge capital raisings expected this year. PricewaterhouseCoopers’ 15th Annual Sharemarket Float Report predicts that an increase in the value of IPOs will make 2007 a stronger year than 2006 when IPO activity declined 25 per cent.
In addition to the Boart Longyear float, other big floats scheduled for 2007 are the partial float of San Miguel Australia (around $1 billion) and Dairy Farmers (around $1 billion). If approved, the sale of Medibank Private ($1.5 billion) would also boost IPOs for 2007.
Dulhunty believes Japanese property trusts will be a big focus this year.
“Japan is a big focus for everybody — there’s been a real rush in interest in Japan in the last six months to a year. We’ve just done an IPO for Challenger Kenedix Japan Trust worth about $280 million. And there’s been quite a few others that have listed including ones by Rubicon, Galileo as well as Babcock & Brown. We’ve found it’s been very busy,” she said.